New government mandated lending rules, commonly known in the industry as TRID, have been reeking havoc across many home loan closings since they started in Oct 2015. The new rules essentially deal with mortgage lenders requirements to be accurate in their numbers and to provide accurate and timely disclosure to the client priot to the loan closing.
So how do homebuyers avoid last minute closing delays
TRID delays may be very real but, the bulk of the issues can be avoided by simply choosing the right Loan Officer. If your you’re Loan Officer is accurate with the documents from the start, you can avoid many of the delay issues,” says Joe Metzler, a Senior Loan officer with Cambria Mortgage in St Paul, MN.
A large percentage of Bank and Credit Union Loan Officers are not personally licensed, and should be considered more of a glorified application clerk versus a professional Loan Officer. This is because the rules do not require Loan officers at banks, credit unions, or mortgage companies affiliated with banks or credit unions to be licensed.
On the other hand, Loan Officers who work for non-bank mortgage companies, and for mortgage brokers are required to be personally licensed. On average, the difference between a licensed and unlicensed Loan Officer can be dramatic.
When working with a clerk, odds are the initial application will have disclosure errors that follow the file all the way to closing, ultimately resulting in a delayed closing.
Add that to the TILA-RESPA disclosure rule change to be one of the biggest changes the industry has faced in years, and many companies are slow to be prepared to deal with the changes. This is especially true the larger the lender is. Software companies, lenders, mortgage industry vendors, and everybody else working on a deal are trying to figure out just what the CFPB now requires, which results in the delays.
Data from Ellie Mae, who provides mortgage loan software to a large portion of the mortgage industry has indicated the average time to close a home loan is clearly longer today than prior to the new rules, averaging 50 days to close a home loan. This is an average of 10-days longer than it took one year ago.
Other data also shows the average home loan closing costs have gone up too, as lenders have had to hire more support personal to deal with the new rules.